Rattled investors piled into Irish bonds, now seen as being as safe as French government debt, yesterday after the crisis in China wiped as much as $2.5 trillion off the value of shares, oil and other financial assets in less than a week.

Rattled investors piled into Irish bonds, now seen as being as safe as French government debt, yesterday after the crisis in China wiped as much as $2.5 trillion off the value of shares, oil and other financial assets in less than a week.

The National Treasury Management Agency (NTMA) borrowed €3bn for 10 years at a price that translates into an annual interest rate of 1.156pc yesterday in the State's first bond deal of the year.

Investors, 88pc of them based abroad, offered to lend as much as €9.6bn to the State at yesterday's so called syndicated bond deal but the NTMA left the bulk of cash on the table.

The NTMA's Frank O'Connor said that decision was prompted by the wish to hold bond auction deals throughout the year, in order to remain close to the market.

Even so, close to half of this year's total €6bn to €10bn State borrowing requirement has now been raised, much of which will go to repay debts falling due in April.

Bond investors' attitude to Ireland has changed dramatically over the past three years.

It is now seen as a semi-core" European borrower and can now borrow at barely more than the price investors demand from France, having been locked out of the markets by sky-high pricing until 2013.

That's why the State's effort to issue bonds yesterday was more likely boosted than hurt by the volatility elsewhere in the markets.

Dumping

As bondholders piled into Irish debt they were dumping risker assets at a dramatic rate. China continues to be the main driver of fears and the worst affected market.

Regulators last night abandoned so called market "circuit breakers" after the controversial tool introduced last year had been used for just the second time yesterday.

The tool meant stock markets shut down automatically after shares fell 7pc, and was designed to prevent a crash.

But after being used twice in the past week - including after just 29pc minutes of trading yesterday, the tool has been ditched in part because shuttered markets have been at least as destabilising as falling exchanges.

As officials scrambled to cope with the latest rout, China allowed the biggest fall in the yuan in five months yesterday, pressuring regional currencies and sending global stock markets tumbling as investors feared it would trigger competitive devaluations.

That heightened anticipation about how Chinese markets may respond on Friday.

The People's Bank of China shocked traders by setting the official midpoint rate on the yuan, also known as the renminbi (RMB) at 6.5646 per dollar on Thursday, the lowest since March 2011.

That tracked record losses in the more open offshore currency market and was the biggest daily fall since an abrupt devaluation of nearly 2pc last August.

That raised concerns that China might be aiming for a competitive devaluation to help its struggling exporters.

"That's the fear of the market," said Sim Moh Siong, foreign exchange strategist for Bank of Singapore, adding that it was a zero sum game as other currencies weakened in response, and the end result would be greater volatility. (Additional reporting Reuters)